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Price Target Alert: Trading the Zacks price target change for CANADIAN NATIONAL RAILWAY

The automated Quantcha Trade Ideas Service has detected a promising Long Iron Condor trade opportunity for CANADIAN NATIONAL RAILWAY (CNI) for the 20-Apr-2018 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.

CNI was recently trading at $81.27 and has an implied volatility of 17.18% for this period. Based on an analysis of the options available for CNI expiring on 20-Apr-2018, there is a 54.16% likelihood that the underlying will close within the analyzed range of $77.83-$95.13 at expiration. In this scenario, the average linear return for the trade would be 20.48%.

Price target: Zacks Research has updated their six-month price target for CNI to $86.48. This price target is a consensus price created from the price targets published by 10 participating analysts whose targets ranged from $80.00 to $91.64.

Mean recommendation: Zacks normalizes analyst recommendations to a 1-5 scale where 1 indicates a strong buy. Their mean recommendation for CNI has been updated to 2.54, which indicates a hold consensus from analysts. Sentiment has moved from 2.63 to 2.63 to 2.63 over the past three months.

Trade approach: The difference between the current price for CNI and the mean price target is $5.70, which represents a 6.41% move (13.43% annualized). Since the 180-day implied volatility for CNI is 17.60%, a neutral range-bound strategy could prove effective if the price target ultimately turns out to be accurate.

Upside potential: Using this neutral range-bound strategy, the trade would be profitable if CANADIAN NATIONAL RAILWAY closed in the range $74.15-$95.85 on 20-Apr-2018. Based on our analysis, there is a 68.63% likelihood of this return. The maximum return for this trade would be 20.48% if CANADIAN NATIONAL RAILWAY closed in the range $75.00-$95.00.

Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.